Determine whether proposed transaction made economic sense

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Reference no: EM132029825

Burroughs Engineering has hired you, an expert in finance, to help them determine whether a proposed transaction made economic sense. They had just sold a parcel of land for $51,000 and had the option of receiving $51,000 cash or $17,000 per year for four years, starting one year from now. Since they don't need the cash right now, but would like to earn at least 12% before income taxes on idle cash resources, the client asks you what interest rate is implied by the terms of the installment option.

Reference no: EM132029825

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